New York Markets After Hours

Save the hand-wringing over the jobs report

Opinion: It’s time to start ignoring the media’s overreaction to the number

By

MarekFuchs

Columnist

Bloomberg

January’s nonfarm payroll numbers had all the charm of airport fog, and this week’s numbers roll in from the Labor Department on Friday. The media, for its ever-overreaching part, are looking toward these February jobs numbers as an all-defining measure, the blazing star of statistics. They are predicting utter desolation if the numbers come in as lame as January’s, but that’s wrong for a host of reasons.

Before cataloging these wrongs, though, let’s put on our hip-high boots and wade through a bit of the media’s excess.

Jim Cramer started off a recent segment on the approaching nonfarm payroll numbers with the words: “I don’t want to say nothing else matters,” before telling us that, well, nothing else does. Said Cramer: “I can’t tell you how big this number is… The only thing that matters is employment. Almost everything else is ephemeral, given up in a couple of days.”

What Investors Need to Know About Ukraine

(15:00)

Paul Vigna and John Carney discuss how investors should approach the situation in Ukraine, and Josh Mitchell looks at the reasons for the explosion in student-loan debt.

If this all sounds familiar, a Remembrance of Hyperventilations Past, it is because it is.

If history has taught us anything, you’d think it was that no one statistic is ever defining.

But added Cramer of the prospect of a lean number on Friday: “It will signal a definitive slowdown.”

Perhaps definitiveness is simply in the eye of the beholder.

Sarah Lawrence College

Marek Fuchs

Here’s about all we know for certain. The U.S. nonfarm payroll report will be released on Friday. And the consensus estimate is for a rise of about 150,000 jobs. In January, the number came in at 113,000 jobs, falling significantly below Wall Street expectations for about 185,000 jobs. Last year, job growth averaged 194,000 a month.

That is definitely cause for watchful long-term concern, but why is it wrong to come unhinged, treating Fridays jobs number as the most important release since the 10 Commandments? Let’s count the ways:

Weather: Large swaths of the nation chattered through January and February. The Midwest, Northeast and South pretty much suffered the coldest, snowiest weather in recorded time. The market accepted this as a contributing factor to the disappointing job growth in January and will probably do so again for February.

Revisions: How many times can the media and traders be scorched by the fact that the jobs numbers we first see are subject to steep revisions? As such, Friday’s numbers might as well be written in lemon ink. Good or bad, don’t overreact. If you need a reminder, just mumble to yourself, “fourth-quarter GDP,” which was recently cut to ribbons from the first report of 3.2% to a 2.4% rate of growth. Holy need-to-rethink-a-whole-set-of-initial-assumptions, Batman.

Distraction: An overwrought focus on any statistic puts you at risk for taking your eye off of a whole world of issues. Russian troops are on the march. Forget Friday. Throwback Thursday might involve a revival of the Cold War. Enough said.

It takes four or five to tango: Proclaiming a pattern after a couple of jobs reports point in a certain direction is foolhardy at any point in time, much less in today’s world of such contradictory economic signs. We ain’t asking for a longitudinal study here. But at least let something happen four or five times before declaring it an ironclad trend.

History: The history of hanging all stock-market perceptions on a single number or utterance — from Reagan’s budget-cut summits in the wake of the 1987 stock-market crash to endless baited-breath Fed watches in modern times — is farce, if not worse.

Should we even care? Jobs numbers might crack the code of the economy or they might be totally expendable. Economists and academics who dedicate a lifetime to such scrutiny, frequently remark on the complexity and ineffectiveness of the number, which might — or might not — have a hard time drawing distinctions between modern entrepreneurs and corporate workers, furloughed federal workers and the unemployed and more. In the face of all the noise, perhaps the faulty nature of the jobs number diminishes its ability to give us any sort of bead on the economy.

Perhaps. It’s not a word that plays well in the media, but should probably be our operative word when it comes to any thoughts about Friday’s coming and confounding jobs number.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers before becoming a journalist who wrote The New York Times’ “County Lines” column for six years. Fuchs speaks regularly on business and journalism issues. He is the author of “A Cold-Blooded Business” and “Local Heroes: Portraits of American Volunteer Firefighters.” Fuchs is on the writing faculty at Sarah Lawrence College and serves as a volunteer fire fighter. Follow himon Twitter.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.